Volkswagen Bolsters Brazilian Presence with a $1.8 Billion Investment

Feb 02, 2024 04:14 AM EST

BLACK BMW VEHICLE INTERIOR — (Photo : PEXELS/MIKE BIRD)

Volkswagen, the German automobile manufacturer, has announced its intention to inject an extra 9 billion reais ($1.83 billion) into its Brazilian operations in the coming five years. Sixteen new car models, including hybrid and electric ones, will be introduced thanks to this investment. With these new initiatives, Volkswagen has increased its projected investment in Brazil from 2022 to 2028 by more than double, to a total of 16 billion real.

Brazil: $ 1.8 Billion Volkswagen Investment

The additional investments will significantly increase Volkswagen's Brazil investment plan for the period from 2022 to 2028, boosting it to a total of 16 billion reais. Furthermore, these investments will allow Volkswagen to expand its production lineup by four models, which were not part of the initial plan. These new additions include Volkswagen's debut Brazil-made hybrid vehicles, a fully electric model, and a pickup truck.

Beyond the original plan, this increased investment will also enable the production of four more models, including the company's first hybrids built in Brazil, a fully electric model, and a pickup truck.

According to reports, in a statement, Ciro Possobom, the CEO of Volkswagen in Brazil, expressed the company's renewed confidence in the Brazilian market, emphasizing their commitment by more than doubling their investments.

The upcoming pickup truck is scheduled to be manufactured in the state of Parana, while the other three newly added models and a new hybrid engine will be produced at various factories in the Sao Paulo state. Volkswagen also revealed its plans to develop an advanced driver assistance system aimed at enhancing vehicle safety.

Volkswagen reported a notable increase in its market share in Brazil in 2023, with a growth of just over 2 percentage points, bringing its market share to 15.8%. Throughout the year, the company managed to sell more than 345,000 units in the Brazilian market.

Green Mobility and Innovation Program

As reported in the Winnipeg Sun, The government's "Mover" program, part of its Green Mobility and Innovation initiative, encompasses requirements for sustainable fleets and tax incentives aimed at companies engaging in decarbonization and the development of new technologies. This program is designed to stimulate increased investments in energy efficiency, which includes setting minimum recycling standards for vehicle manufacturing and reducing taxes for those with lower pollution levels.

Under this program, more than 19 billion reais in tax incentives will be provided to encourage companies to invest in decarbonization efforts.

In response to the competitive threat posed by Chinese brands like Great Wall Motor Co. and BYD Co., which have announced plans to manufacture electrified models in Brazil starting this year, the Brazilian automotive industry is taking concrete steps to implement decarbonization and emissions reduction measures in the vehicles produced and sold within the country.

In contrast to some other markets, Brazil has been utilizing ethanol as a means to reduce emissions for over four decades, with biofuel emerging as a transitional solution towards complete electrification in the South American nation.

Instead of making substantial investments in building battery factories for fully electric vehicles, companies are focusing on the development of hybrid models. These hybrids will incorporate an electric engine alongside a combustion engine, but they will be flexible and capable of running on either gasoline or ethanol.